Shekhter’s WS Communities defaults on Hankey Capital loan

WS Communities, the apartment landlord founded by Neil Shekhter, has defaulted on a loan from Hankey Capital tied to a parcel in Santa Monica, The Real Deal has learned. 

The firm is in default on a $5.35 million loan from the lender provided in December of last year, according to a notice filed with L.A. County. WS Communities CEO Scott Walter did not respond to a request for comment. 

Under state rules, a foreclosure on the property, located at 1433 6th Street, can be scheduled no earlier than Jan. 31 — 90 days after the initial notice of default. 

WS Communities owed about $219,000 under the loan, as of the end of October, according to the notice. 

The firm bought the less than 10,000-square-foot parcel at the end of 2022 for $6.35 million, records show, using the Hankey Capital debt. 

The site sits adjacent to 1437 6th Street, where WS Communities had proposed a 16-story residential tower under the builder’s remedy provision last year.

In essence, builder’s remedy is a penalty — for cities that fail to meet their state-mandated deadline for a housing plan, developers can bypass local zoning entirely, as long as the projects meet certain affordability thresholds. 

WS Communities had filed 14 builder’s remedy applications in Santa Monia, drawing ire from the City Council and its residents.

In May, the city came to an agreement with WS Communities, with the firm agreeing to pull most of its builder’s remedy filings. In exchange, Santa Monica agreed to expedit processing and additional incentives for potential new projects. 

The agreement also settled other litigation between WS Communities and the city over tenant harassment allegations and complaints over city leasing rules. 

It’s unclear whether WS Communities is in discussions with Hankey to resolve the loan or work out some kind of reprieve. 

The default came a month after one of WS Communities’ other lenders, Ladder Capital, filed a lawsuit against the firm, alleging it defaulted on a $15 million loan in September tied to an apartment complex at 1901 Overland Avenue, court records show. 

Ladder asked the court to appoint a receiver on the property, which would have the power to sell it. 

Read more

Los Angeles

Neil Shekhter’s half-brother alleges $100M in unpaid loan payments

San Francisco

Remedy for whom? Bay Area developers use 'builder's remedy' loophole to downsize housing projects

Los Angeles

Even with $120M in state grants, Shangri-La Industries can’t repay loans